GLOBAL MARKETS-Wall St retreats, Euro heads for record quarterly drop

* Euro heads for biggest quarterly fall since introduction

* Greek debt negotiations weigh on euro, dollar gains

* U.S. stocks off despite strong consumer confidence, M&A

* Crude sags as Iran’s nuclear talks deadline looms

By Sinead Carew

NEW YORK, March 31 (Reuters) – U.S. stocks retreated on Tuesday from the previous session’s rally, though major indexes were headed for a positive first quarter, while the euro was on track for its biggest quarterly fall as worries about Greece kept the currency under pressure.

The European Central Bank’s one-trillion-euro economic stimulus program, launched this month, has weakened the euro and prompted investors to pile into euro zone shares on bets currency weakness, low borrowing costs and cheap oil will boost European companies’ profits.

The euro was last down 0.7 percent against the dollar Its dive has been the dollar’s gain, with the greenback recording its biggest quarterly rise against the world’s top six currencies since 2008.

Meanwhile U.S. stocks have been choppy as investors await the Federal Reserve’s first interest rate hike in almost a decade.

Wall Street saw some support on Tuesday after U.S. consumer confidence unexpectedly rebounded in March. It was also helped by two days of corporate acquisition announcements including several biotech deals on Monday and Charter Communications’ plan to buy Bright House Networks for roughly $ 10 billion.

But this was not enough to turn the market higher.

“Today’s move is largely in reaction to yesterday, a back-to-normal session, but our view on the market is still constructive. As we see continued acquisition deals, that will be supportive for the backdrop,” said James Dunigan, chief investment officer at PNC Wealth Management in Philadelphia.

The Dow Jones industrial average fell 63.59 points, or 0.35 percent, to 17,912.72, the S&P 500 lost 5.22 points, or 0.25 percent, to 2,081.02 and the Nasdaq Composite dropped 13.28 points, or 0.27 percent, to 4,934.16.

There was a 0.5 percent dip on the pan-European FTSEurofirst 300 index as traders squared up for the quarter end.

New euro zone data showed a small pickup in inflation following the launch of the ECB’s stimulus, and with the program set to run for a year and a half, investors remain upbeat on the region.

Greece’s debt negotiations have made investors uneasy on both sides of the Atlantic. Germany’s Chancellor Angela Merkel said on Monday Athens had a certain degree of flexibility on which reforms to implement but stressed that they must “add up”.

Greece’s leader Alexis Tsipras responded by appealing for an “honest compromise” but warned he would not agree to unconditional demands.

Japan’s Nikkei finished the first quarter with a chunky 10 percent gain and the often volatile Shanghai Composite Index hit another seven-year high and gained 16 percent for the quarter on bets of more stimulus from Beijing.

Oil took a slide on prospects that OPEC member Iran could reach a deal with six world powers on its nuclear program that could allow Tehran to sell more of its oil onto an already saturated market.

U.S. crude was last down 1.4 percent at $ 48.00 per barrel while Brent fell 2 percent to $ 55.18.

(Additional reporting by Marc Jones in London, Shinichi Saoshiro in Tokyo and Ryan Vlastelica in New York; Editing by Catherine Evans, Susan Fenton and James Dalgleish)

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